2024-03-14 17:09:00
market report
After another record high, investors took a breather and took profits. New US economic data in particular curbed the euphoria.
On the domestic stock market, investors followed a weaker Wall Street in the afternoon and took profits. This came after the DAX had initially set another record high at 18,039 points. In the end, the leading German index closed moderately weaker by 0.11 percent at 17,942 points. Just yesterday the DAX surpassed the 18,000 point mark for the first time. Above all, US producer prices, which were surprisingly higher than expected, curbed interest rate euphoria today.
However, despite the somewhat weaker afternoon trend, there is no talk of a trend change. The highs and also the fact that every small setback is bought are signs of strength, according to the chart analysts at HSBC. The MDAX of medium-sized stocks offered a similar picture, losing 0.34 percent to 26,261 points.
Not only the constant interest rate fantasy, but also solid corporate balance sheets and a robust Wall Street driven by the AI boom are currently supporting the DAX, but also other world markets. The fact that most of the companies in the leading index are internationally positioned means that the current domestic economic weakness only has a limited impact. Some sectors, such as insurance recently, also presented excellent business figures. However, the situation looks different in the export and industrial-heavy MDAX; new record highs are not on the agenda here.
Experts warn against too much carelessness. At the moment, even the slightest hint of falling interest rates is enough to trigger euphoria. “The market is very, very short-sighted right now. It’s actually only thinking about the expected interest rate cuts by the US Federal Reserve (Fed) and the European Central Bank (ECB) towards June,” said Kit Juckes, strategist at the major Paris bank Société Générale .
The Fed will announce its key interest rate decision next week, and investors are largely expecting the interest rate to remain unchanged. On the futures markets, the probability of monetary policy easing at the Fed meetings in June and July is currently estimated at 65 and a good 80 percent. Falling interest rates in the event of further interest rate decisions are considered more or less a foregone conclusion.
The US stock markets remain in the red after mixed economic data. The leading index Dow Jones is currently losing almost 0.3 percent. The market-wide S&P 500 is also down around 0.3 percent. The technology-heavy selection index Nasdaq 100 also fell by 0.3 percent, the composite index by 0.4 percent.
Among the US economic data, the New York Stock Exchange focuses on both retail sales and producer prices. According to Helaba experts, retail sales are not exactly driving interest rate cut expectations from the US Federal Reserve, “especially since initial applications for unemployment assistance remain at a very low level and point to a solid labor market.” Specifically, the number of weekly applications for aid fell by 1,000 to 209,000, as the Labor Department in Washington announced. Economists had expected an average of 218,000 applications.
Producer prices put the greatest strain on the market because they dampen investors’ hopes for interest rates. In February, these rose significantly more than expected at 1.6 percent. An increase of only 1.1 percent was forecast. This fueled concerns among investors that the US Federal Reserve would lower interest rates later than expected in its fight against inflation. The producer prices apply ex works gate – i.e. before the products are further processed or go on sale. This allows you to provide early signals about the development of consumer prices.
However, the surprisingly weak US retail sales limited the losses on the stock markets. These rose by 0.6 percent compared to the previous month; experts had expected an increase of 0.8 percent after a revised decline of 1.1 percent in January. “You could say that the weak retail sales partially offset the high producer prices,” commented Andre Bakhos, managing director at analysis house Ingenium.
On the foreign exchange market, according to US data, the euro extended its losses in late European trading and fell below the $1.09 mark. The common currency was last traded at $1.0886, around 0.5 percent weaker than yesterday. The European Central Bank set the reference rate at 1.0925 (Wednesday: 1.0939) dollars
Headwind for the euro came from Greece’s central bank chief Yannis Stournaras in the morning. He spoke out in favor of two interest rate cuts by the ECB before the summer break. However, he is seen as a supporter of a very loose monetary policy line. His comments were therefore not particularly surprising.
In view of falling inflation rates, the ECB is heading towards easing its monetary policy. A first interest rate reduction is currently expected on the financial markets for June. The ongoing wage negotiations are considered particularly important as they can pose additional inflation risks. Many high-ranking ECB representatives such as President Christine Lagarde recently referred to this.
Bitcoin set a new record, but then fell noticeably. Initially, $73,794 was paid on the Bitstamp trading platform. That was the highest price ever achieved. In the afternoon, however, the oldest and largest cryptocurrency in terms of market value went down.
In the past few days, the Bitcoin price has rushed from one record to the next. The main reason is the high demand from several ETF providers who have been able to offer their new Bitcoin funds in the USA since January. This makes it possible for investors to invest in the digital currency without having to buy it directly themselves. Added to this is the prospect of slower Bitcoin growth as the reward for verifying Bitcoin transactions will be halved in April.
The Bitcoin rally is unparalleled, but has recently been accompanied by setbacks with increasing frequency. However, this is more typical of cryptocurrencies, which are considered particularly risky financial investments due to their sometimes high price fluctuations. Regardless, Bitcoin has gained around 70 percent since the beginning of the year. Over the course of one year it is almost 200 percent, which corresponds to a threefold increase.
Decline in profits and Postbank chaos have reduced the remuneration of the Deutsche Bank board of directors for the 2023 financial year. Including bonuses, the eleven managers working over the year, headed by CEO Christian Sewing, earned a good 64.6 million euros after around 64.9 million euros a year earlier.
The Munich car manufacturer BMW benefited from higher vehicle sales and increased its sales last year. Revenues increased by nine percent to almost 155.5 billion euros, as the company announced in the afternoon. They therefore exceeded the expectations of the analysts surveyed by the DAX company.
Profit, on the other hand, fell by a good third to just under 12.2 billion euros. The complete takeover of the Chinese subsidiary BBA played a role: a year ago, the revaluation of the shares had driven up profits. If the one-off effect mentioned from the revaluation is not taken into account, the consolidated profit would be “moderately above the previous year’s value,” it said.
The company’s most important operating profit margin improved by 1.2 percentage points to 9.8 percent. Analysts had expected a little more here. The share fluctuated significantly after the announcement, ultimately falling by almost three percent. This may also be due to the fact that BMW wants to cut the dividend. At six euros per ordinary share, the distribution is expected to be 2.50 euros lower than a year ago.
Germany’s largest arms company Rheinmetall wants to significantly accelerate its growth course this year. Sales rose last year by 12 percent to around 7.1 billion euros, and net profit rose by nine percent to 0.6 billion euros. In 2024, Rheinmetall is now targeting a sales volume “in the order of 10 billion euros”.
The energy company RWE expects shrinking results in the new year after significantly increased profits in 2023. The adjusted net result in 2024 will be at the lower end of the range of 1.9 to 2.4 billion euros. The main reason for this is the fall in wholesale electricity prices. The shareholders, including many municipalities in North Rhine-Westphalia, are to receive a dividend of 1.00 euros per share for 2023 and 1.10 euros for 2024.
The RWE stock closed almost three percent in the red, also because CEO Markus Krebber rejected a share buyback program in an analyst call on the annual results. According to one trader, there were probably hopes of a clear announcement of a buyback. The cautious statements about developments in the European economy also deterred investors.
According to a media report, the US electric car manufacturer Tesla is planning to produce the semi truck at the Grünheide plant near Berlin. “I think it makes sense to produce the semi-truck in Europe in the Giga Berlin,” the “Handelsblatt” quoted Tesla boss Elon Musk as saying: According to the newspaper, Musk also confirmed that the production of a mass model, also called the Model 2 Commonly, “definitely coming to Berlin in the long term”. Musk introduced the Tesla Semi in 2017. The electric semi-trailer is currently being developed in Nevada and is being built in small numbers. Production is scheduled to ramp up at the end of 2024.
The automotive and industrial supplier Schaeffler is taking another step closer to taking over the drive specialist Vitesco. Both companies have concluded a merger agreement with the approval of their supervisory boards, they said. As announced, Vitesco shareholders will receive 11.4 Schaeffler shares for each of their shares. In order for the deal to go through, the shareholders of both companies still have to agree. Vitesco shareholders will vote at their annual general meeting on April 24th, and Schaeffler’s on April 25th.
The incorporation of Credit Suisse into UBS is causing concern for another international organization. The emergency takeover announced around a year ago secured financial stability, but also created “new risks and challenges” for the Swiss economy, as the Organization for Economic Cooperation and Development (OECD) explained. “UBS, which was already a globally systemically important bank before the merger, has become even larger and must meet even stricter regulatory requirements under the too big to fail rules,” said the OECD.
Strong demand at the end of the year gave Foxconn a surprisingly significant jump in profits. The world’s largest electronics contract manufacturer announced that net profit for the past quarter rose by 33 percent to the equivalent of 1.54 billion euros. Analysts had expected 1.26 billion euros. The Apple supplier promised a “significant” increase in sales for the current year.
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